NBN to rebate for higher speeds

Service providers may be eligible for a rebate to upgrade existing users to higher speed tiers

The company responsible for building the National Broadband Network, nbn, will introduce a three-month credit scheme designed to promote the uptake of higher speed tiers on its network. The “Step Up AVC Credit” will see service providers refunded up to $33 over 3 months for upgrading existing customers to a higher speed tier.

End users must stay on the new tier for a minimum of 90 days to be eligible for the credit.

Rebates range from $9 to $33 over 3 months:

12/1 Mbps to 25/5 Mbps: $9 over 3 months

12/1 Mbps to 50/20 Mbps: $21 over 3 months

12/1 Mbps to 100/40 Mbps: $33 over 3 months

25/5 Mbps to 50/20 Mbps: $21 over 3 months

25/5 Mbps to 100/40 Mbps: $33 over 3 months

50/20 Mbps to 100/40 Mbps: $21 over 3 months

In an effort to reduce congestion and lower CVC congestion, the credit has strict guidelines about the state of congestion within the network. Any connectivity virtual circuit connected to end users applying for the “Step Up AVC Credit” cannot exceed an average of 95% of network utilisation for 4 consecutive 15 minute intervals in any 24 hour period.

During this campaign, nbn will also co-fund marketing activities associated with the “Step Up AVC Credit” at $1.50 for each eligible AVC.

The scheme will start in November 2016 and finish at the end of March 2017.

I'm the author of jxeeno™ blog and co-founder of HSCninja.com. I'm a bit of an #NBN and public transport geek. You can normally find me juggling work and my studies at UNSW where I'm currently completing a degree in Geospatial Engineering.

Sxg003

Why not just reduce the cvc charge instead given the issue RSPs have is exponential growth in data and video on demand

tsangk

There is a risk for NBN if they drastically and suddenly reduce CVC. There’s no guaranteeing that providers will buy more CVC after a reduction in charge. Providers may opt to simply pocket the savings while retaining lower quality of service for end users.

That’s why nbn needs to incentivise providers to buy more CVC while reducing the cost — e.g. the marketing campaign above or the dimension-based pricing.

Cameron Watt

But that doesn’t have to be the case. Why don’t NBNco change the model instead?

Why not increase the AVC by a small amount and include the cvc that NBNco provisioned to deliver the AVC rate for 95% of the time in any 24 hour period. They could then offer additional 98% and 99.5% options. (Picking random numbers for the example)

Or they could eliminate cvc entirely, increase AVC and simplify things greatly. It might help encourage competition from small players as they don’t have the same challenges that smaller user base creates regarding cvc provisioning.

When asked “Why do we do it this way?”, the single worse answer is “Because that is how we’ve always done it”.

tsangk

Yep. Hopefully access seekers will be able to pressure nbn for a more drastic change than just another price decrease.

9Xth percentile billing is a common approach. They could even do a dual-pricing approach where access seekers can stay with the current structure (perhaps with a discount) or opt for a 9Xth percentile billing option.

Let’s see what eventuates

Lars

There is actually a simple solution to this problem with no risk for NBN. Have them offer providers a new agreement giving drastically reduced CVC pricing in exchange for an enforced requirement/purchase agreement attached that requires a specific minimum amount of bandwidth be purchased per customer. That a specific maximum contention level not be allowed to go beyond. Automatically upgrading as the provider adds more customers should they be right at said limit.

Additional option to make the most use of the network: rather than raise the AVC pricing, actually lower the AVC pricing of the higher tiers so they will be utilised. Potential to remove the excess of options for the AVC tiers entirely. Set it up as a two speed option. Each connection being provided at either one of the lowest two current tiers for the low cost options or at it’s maximum rate. Setting the maximum rate option regardless of medium to the same AVC cost. 100/40 for FTTN/HFC, 1000/400 for FTTP. As upgrades are installed in the future automatically set that new tier as the default maximum rate. Makes for a completely dependable, and measurable amount of revenue for NBN.